Frustrated Dayton Threatens Veto On Tax, Spending Bills

ST. PAUL, Minn. (AP) — With mere hours left in the legislative session, Gov. Mark Dayton said Sunday evening he’d veto bills headed to his desk that would modestly cut income taxes for most Minnesotans, provide some additional funding for schools in a budget crunch and tweak government spending across the board.

Dayton’s veto threat raised the specter that the top priorities of both the Democratic governor and Republican-controlled Legislature would remain unfinished as session concludes. But Dayton left some wiggle room for an eleventh-hour push.

“If they come to me the way they are now, I will veto them,” he said with just over three hours before a midnight Sunday deadline.

Whether Republican leaders will alter course or test the governor to sign legislation he’s objected to remains unclear. A complicated tax filing season in 2019 and tax increases for hundreds of thousands of Minnesotans depends on whether Dayton and Republicans can strike a last-minute agreement.

Republicans were the first to back away from negotiations, cutting out late Saturday and proceeding with a plan to plow some emergency funding for schools facing budget shortfalls — money that Dayton deemed necessary — into a tax bill. The tax changes would cut tax rates on the state’s two lowest income brackets, but the addition of school funding was meant to get Dayton on board with a bill that he vetoed just last week.

And Republicans also sent Dayton a separate government funding package — nearly 1,000 pages stuffed with funding for school safety improvements, opioid abuse prevention dollars and money to improve oversight of senior care facilities — after stripping out more than half of the 117 items Dayton’s administration singled out as objectionable.

But rather than hash out their differences, the two sides traded blame in separate press conferences for a potentially inconclusive legislation sesson. Dayton called it a “debacle.”

Senate Majority Leader Paul Gazelka said the Legislature was flying blind without adequate guidance from Dayton on what changes were needed to win his signature. After passing a budget bill overnight and sending Dayton tax legislation with school funding Sunday afternoon, lawmakers started turning their attention to a package of $1 billion in public construction projects.

Conforming Minnesota’s tax code to sweeping federal changes has been atop the to-do list since the Legislature convened in February. But Dayton has remained steadfast that he will not sign a tax bill unless the Legislature sets aside $138 million for schools facing budget shortfalls —making good on that promise last week after rejecting a GOP-backed tax bill.

Dayton’s administration said the GOP’s school funding falls far short. Much of the $225 million that Republicans have proposed to help schools came from allowing districts to shift existing funding for community programming and teacher training to solve their budget woes. Another $50 million would come from forcing the Department of Natural Resources to repay for using schools’ land.

“This is merely a shell game or a transfer of money,” said Sen. Chuck Wiger, a Democrat from Maplewood. “It’s a gimmick.”

Sen. Eric Pratt, a Republican from Prior Lake, defended the proposal, saying it gives schools the flexibility and options for weathering financial turbulence. He and other Republicans say their proposal meets the governor more than halfway and that he never indicated exactly how lawmakers should fund schools.

Pratt said the proposal focuses on giving “those districts that have the most urgent budget problems” the ability to fix them.

“Let’s not worry about if it’s new money or existing money,” he said.

But a decision may not come quickly on any of the marquee items. The governor has two weeks to act on bills passed late in the session and has been adamant he will not call a special session.

Democratic House Minority Leader Melissa Hortman said Republicans were to blame for a potentially inconclusive session.

“This Republican majority keeps taking the approach: ‘We’re going to shove it at you, governor, and see how much you’ll take,'” she said.

Meanwhile, Republicans who control the Legislature were planning a rare vote to override one of Dayton’s vetoes. Dayton struck down a bill late Saturday that would have reimbursed the local offices who have struggled with the state’s troubled new computer system for driver registration called MNLARS.

The Legislature has never overridden one of Dayton’s vetoes, and lawmakers have tried just once — on a 2012 bill to expand fireworks sales. It requires a two-thirds majority vote, and GOP Rep. Dave Baker said it was up to lawmakers to hold the governor accountable and ensure struggling businesses get help.

“While Gov. Dayton says that he takes responsibility for this, his veto says that he does not,” Baker said.